OTTAWA, Nov 30 (Reuters) - A Canadian cabinet figure known
to have reservations about CNOOC Ltd's bid to buy
Nexen Inc said Friday that at least some of
Canada's concerns about getting reciprocal treatment from China
had been addressed by an investment pact.

In his remarks, Immigration Minister Jason Kenney also
underscored Prime Minister Stephen Harper's concerns about
takeover bids by foreign state-owned enterprises. He said Harper
had stressed the importance of preserving Canadian values, such
as human rights, in dealing with China.

The remarks highlighted the depth of a government debate
over whether to approve state-owned CNOOC's plan to buy the
energy producer.

Shares of Nexen, which had advanced before Kenney spoke,
erased some gains afterwards, only to surge again by midday,
presumably as the market looked more towards the positive
nuances in his remarks, rather than the negative.

Investors have been trying to gauge whether the Conservative
government's desire for foreign investment and good ties with
China will outweigh an intrinsic distrust of the Communist
government.

One of the concerns with China's $15.1-billion bid is the
possibility that Beijing will scoop up large chunks of Canada's
natural resource sector and may not operate purely from
commercial motives.

Harper has stressed repeatedly to Chinese officials that the
economic relationship must be a two-way street. Kenney suggested
the recent investment agreement had addressed that issue, at
least in part.

"One of the key reasons why we finalized the Foreign
Investment Protection and Promotion Agreement (FIPPA) after 18
years of negotiations is to provide for a degree of reciprocal
protection for investment on both sides," said Kenney, whose
reservations about the deal stem, in part, from his concern over
human rights.

In the past, he said, Chinese investors would benefit from
Canada's legal protection, but Canadians did not enjoy the same
protection in China.

"So as far as I'm concerned, the FIPPA gives us a great deal
of reciprocity," he said, speaking after an announcement on
refugee policy. "Now, Canadians will have some enforceable legal
remedies to protect their investments in China. So that speaks
to reciprocity."

"The prime minister...has underscored our government's
particular concern about large-scale, proposed acquisitions by
state-owned enterprises and the need for a rigorous analysis to
be undertaken for such applications," Kenney said when asked
about his views on CNOOC.

The government has a Dec. 10 deadline for deciding whether
to approve the deal, though it can extend that with the
agreement of both sides.

Ottawa says that at the same time, it will unveil updated
guidelines for foreign investment. This could happen at any
time, although it isn't expected to be announced before next
week.

Finance Minister Flaherty caused a bit of uncertainty when
he told reporters on Friday that there was no deadline of which
he was aware.

When reporters asked if a consensus had formed among cabinet
members on how to treat companies owned by the Chinese
government, Kenney declined to speak about any deliberations,
but said:

"Our prime minister has consistently articulated a balanced
approach to our relationship with China that emphasizes, yes,
our commercial interests, but also our values, in a way that the
previous policy was unbalanced, having largely neglected the
values dimension of the relationship."

Nexen shares had been under pressure this week because of a
possible delay in the U.S. regulatory approval process, but the
Canadian government signaled late on Thursday that the U.S.
deliberations would not affect Canada's review.

As of 1:50 p.m. EST (1850 GMT), Nexen was up 3.9 percent at
$24.36 in New York. CNOOC has offered $27.50 a share.

When Ottawa decides on CNOOC and its broader foreign
investment policy, it is also expected to decide on a C$5.2
billion ($5.3 billion) bid by Malaysia's Petronas for
Progress Resources Energy Corp. Progress's shares were
up 2.6 percent at C$20.04 in Toronto. The Petronas offer price
for Progress is C$22.